Raymond James downgraded Universal Health Services Inc. Wednesday morning to market perform after Sen. Chuck Grassley (R-Ia.) requested an update on a federal investigation into the company. The additional scrutiny takes “the political risk to a more dangerous level” and “could invite more caution and/or red tape into the admissions process- either externally or from self-policing,” Raymond James analyst John Ransom said. Grassley’s letter referenced a BuzzFeed investigation into UHS which claimed the company used patient admissions to make profits at patients’ expense. UHS said last week that it disputed and denied the story and has said that one of the article’s claims — that patients are wrongly coded for “suicidal ideation” — doesn’t actually provide an economic benefit to the company. Even so, the latest claims on top of an ongoing investigation by the investor general means “we think the risk-reward is no longer compelling,” said Ransom. UHS shares, which dropped 12% the day the BuzzFeed article was published, have dropped 8.8% year-to-date, compared with a 11.1% rise in the S&P 500 .
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